Software Stock a Schaeffer's Top Pick for 2021

Keep an eye on APPN's $150 level

Jan 5, 2021 at 12:16 PM
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To kick off the new year, we compiled 12 of our staff's favorite bull picks for 2021. But there's still some leftover holiday cheer over at Schaeffer's, so we'd like to add two names to the list. First up is Virginia-based cloud computing company Appian Corporation (NASDAQ:APPN).

APPN Chart

Appian --known for its "low-code" software development tools -- scored a top-line beat back in November. This acted as a catalyst for a multi-stage rally over the course of that month. The shares peaked at $215 on Nov. 27, well over triple the $62 low APPN tagged near the end of October. The share price then underwent a sharp correction into mid-December before consolidating primarily in the $150's into year-end.

As we enter the New Year, wide and deep share technical support in the $145-$155 area suggests that further pullbacks will be truncated as they enter that area, even as APPN’s chart remains bullishly aligned for renewed acceleration to the upside.

In addition, analyst and speculator sentiment remains tepid and behind the curve. The consensus 12-month price target at $85 barely exceeds half of APPN’s 2020 closing price and total put open interest accumulated by options players now exceeds that of call options by 33%.

Most critically, a swing toward a more actively bullish posture by these two constituencies would, as the year progresses, call into play untapped demand for the shares. We see an advance by APPN in 2021 back to the November 2020 all-time highs as being well within reach for this burgeoning enterprise software leader.

And the boon for options buyers is that Appian stock hasn't had a problem making big moves. The stock's Schaeffer's Volatility Scorecard (SVS) sits at 80 out of 100, suggesting APPN has consistently exceeded the volatility expectations priced into its options over the past year.


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